Tuesday, January 5, 2010

The Future of News

I have been thinking about newspaper, journalism and technology a lot lately. Part of this is an outgrowth of Viewpass, a project I worked on last year that was intended to help newspaper publishers monetize their web content. Newspapers loved the idea and it got a lot of traction, but in late summer, the industry decided that its salvation lay with digital rights management (DRM) instead. Apparently they missed the part where DRM failed for software, movies and music. So far, the effort has brought much ridicule and few dollars.

Anyway, we are in the midst of a disruptive cycle in it is gathered, published and consumed. I think that most senior newspapermen are failing to grasp that most news is a commodity, and therefore very difficult to monetize.

I still read the NYT on paper, but most of my news is consumed online, via Twitter, or RSS reader. It amazes me when I see headlines in newsprint on breaking issues that are out of date, because everything changed after the paper went to press.

Newspapers failed to understand cycle of creative destruction that they have reported on so often. In that failure, they stood by as the Web took away a lot of their lucrative revenue base, starting with classifieds, because the web is a superior medium. Suffering from a bloated cost structure, the writing was on the wall. The collapse of housing and auto, which were the two largest advertisers, has just hastened the fall.

With smartphones, you can consume news anywhere....why would you wait for a piece of paper every morning.

Really the only thing newspapers still have going for them is the large format, which is great for ads. Oh wait.....Apple just drove a stake through that heart with the iPad.

Of course, the iPad is expensive. And, some people prefer newsprint to a screen. Great.....let's build a business model based on advertising to poor luddites.

I worry about the state of the newspapers, because a strong press is a fundamental element of a well functioning democracy. The number of journalists in Washington is plummeting as the number of lobbyists continues to grow.....not a good trend. Journalism is not going away, however, it is just morphing. So far, we seem to be moving back to the old days (say 100 years ago), where newspapers were mouthpieces for their owners, and yellow journalism with biased agendas was the norm. In a nation where we don't often stop to question or think for ourselves, that creates dangerous polarization.

Breaking news is a commodity and hard to build a business model around (except for financial news). You can build a model around analysis and local interest, however. But, newspapers are laying off journalists and relying on the wire services for news, so they are killing their competitive advantage. New publishers are springing up in the blogosphere and picking up the best journalists. Without the legacy costs of printing plants and their unionized (read expensive and inflexible) labor, the new online publishers have a shot at a successful business model.

Simultaneously, how we consume news is changing rapidly. Is the iPad the future? I don't know for certain. I, personally, probably won't be an early adopter because I have an iPhone and a laptop, and so I don't really have a dire need for a product that fits in between. The iPad does not fit in my pocket. If I am going to have to carry a bag, I might as well bring my laptop, which is more powerful.

Newspapers have one other competitive advantage....they have ad salesforces with good connections into local businesses. That is not enough to save them long term. Newspapers still have a powerful brand, but that is eroding daily. Can they make the necessary changes to adapt to the new world of news consumption before they collapse financially. Will the new breed of publishers provide as robust a defense of freedom?

There is a lot of flux going on. My guess is that a few existing publishing brands will make it to the other side, but most will not. Will advertising revenue be enough to support the new breed of news sites? The elite ones, especially with financial news, can charge subscriptions. I am thinking about the WSJ, Economist, and the NYT. For the rest, things are going to be lean. I stopped reading local newspapers a long time ago because they became crap. I would like to get some local news, but wading through the SF Chronicle, for example, is painful. Most of it is the AP wire feed.

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